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Fri, Aug 7, 2020 04:56
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Management Side
Coronavirus and papermaking woes bring tough times to Maine's logging industry

Even for an industry known for difficult labor without great rewards, these are particularly hard times for Maine's loggers.

Wood prices were low going into a winter that was relatively brief and mild, which made it hard for loggers to harvest trees - long stretches of cold to freeze the ground solid is best for getting heavy equipment in and out of the woods, while tearing up soft soil can mean fines for environmental damage or stuck machinery.

Then the coronavirus hit and demand dropped further as orders to paper mills were canceled and shipments of wood pulp to Asia scuttled when paper plants halfway around the world closed their doors.

A recent explosion in a pulp digester at the Androscoggin Mill in Jay and plans to shut down a paper machine in Westbrook led to layoffs at both mills and further weakened demand for the loggers' products.

"It's pretty uncertain times right now," said Jim Nicols, who heads Nicols Bros. Logging in Mexico, which has been in business since 1979. "This is probably the lowest point that I've ever seen."

Nicols said his business is down nearly one-third from where it should be. His primary customers are the paper mills in western Maine and, even when they are buying wood, prices are low.

"We're in a supply-and-demand market," he said, and demand is slack.

Some loggers told an industry newsletter, The Logger's Voice, that they're selling wood to mills at a loss just to keep the product moving.

Nicols said he's been able to avoid layoffs by keeping a lid on hours for employees and using a Paycheck Protection Program, or PPP, forgivable loan, but he's worried about the future of the industry.

As president of the Professional Logging Contractors of Maine, Nicols said he's concerned some loggers may go under, hurting the whole industry in the state.

"We need to make sure that this industry exists," agreed Gavin McLain of CTL Land Management Services in the Knox County town of Washington.

McLain said loggers work with foresters and the owners of woodlots to make sure the forest is managed in a healthy manner. That includes pruning out the low-value wood, destined for pulp or biomass for generators, to provide room for higher-value trees to grow.

"We say you have to remove the weeds from the forest," he said.

With the market for that wood severely depressed - in addition to dropping demand from paper mills, low prices for oil mean many generators have switched from wood to petroleum - the work to maintain higher-value stands of trees won't get done if the logging companies don't survive, he said.

"It takes generations to develop these companies" and the loggers' expertise to help manage the forests, McLain said.

McLain said his company has picked up some work operating a sawmill to process higher-value wood and have been kiln-drying wood, but that's only a stopgap solution.

"What we have currently is not sustainable long-term," he said.

That's why Professional Logging Contractors is lobbying for loggers to be included in the next coronavirus relief bill, said Dana Doran, executive director of the industry group. A recent survey of members found that 88 percent have been hurt financially by the pandemic, with over 40 percent projecting devastating losses for the year of at least 20,000 tons of lumber.

Loggers are loath to seek government aid, Doran said. They resist government intrusion into their businesses and worry that accepting aid will come with strings - as in more regulation - attached.

But, Doran said, loggers still recognize the need to be included in the next coronavirus aid package Congress is expected to take up when it returns from recess. He said a proposal to provide the industry with $2.5 billion is backed by Maine's congressional delegation and is expected to be introduced this week.

"We don't ask for government handouts, we don't ask for subsidies, but we don't see an alternative," he said. About 65 percent of Maine logging companies took PPP loans, Doran said.

The aid in the next package, Doran said, would help the loggers through the end of the year, when they can get a better sense of what the future holds.

Doran called the series of setbacks hitting the industry as "a slow-rolling hurricane" that does more damage as time goes on.

He said the warm winter, the falloff in Asian business and low pulp prices were bad enough, and then the Jay explosion and mill layoffs just added to the misery.

"It's been all downhill from there," he said.

Some mills have shifted to new product lines over the past few years, changing to tissue and food packaging production, but those markets have declined in the current economy as well, Doran said, so demand for wood for pulp remains low.

Randy Kimball also said there's a business downside to the industry receiving government aid. Keeping more loggers in business, he said, means that supply will be maintained, which would further depress prices unless demand picks up.

Kimball, whose father started Kimball & Sons Logging and Trucking in Poland, said business has dropped off sharply this year, although he's been able to avoid layoffs, partially thanks to a PPP loan that he reluctantly sought.

"Loggers hate to take money" for anything other than wood, he said.

Demand is so slack that he's had to keep a lid on hours for his two employees to keep the business going.

"You work three days and then you have to shut down" because demand is so weak, Kimball said.

There's no money for overtime, he said, and layoffs are "not off the table" if work continues to decline. If low oil prices continue to shift biomass generators away from using wood, the pain will spread, he said.

"If we lose biomass, logging is done in this state," Kimball said.

That's a scenario that sends chills up Doran's spine because no one is exactly standing in line to replace any loggers who quit the business. It's an industry that requires experience as well as a heavy investment in machinery and, as such, is not welcoming to startups.

"Once they decide to give up, they're not coming back," he said. "It's not a faucet you can turn on and off."


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